Daily Brief Financials: Aareal Bank AG, Bank Central Asia, New World Development, ASX Ltd, The Diverse Income Trust PLC and more

• The Delisting Agreement should end the Atlantic bidding for Aareal Bank AG (ARL GR) saga. Atlantic has been hoovering shares in the market since last 7 June.
• Atlantic probably owns c.90.8%. Based on daily trading volumes, it would take many days to acquire shares and reach the 95% barrier required to implement a squeeze-out.
• Spread is 0.3%/2.3% (gross/annualised, assuming settlement on 8 December), not too bad for a quick buck, but liquidity is razor thin.

• Bank Central Asia (BBCA IJ) released another set of positive numbers in 3Q2023, outperforming the overall sector on loan and CASA growth, allowing the banks to maintain NIMs and profitability.
• The bank’s digital banking franchise continues to grow, with 31 million users of its mobile banking, boosting transactions and customer numbers, with a broadening of features and service offerings available. 
• Consumer banking, SME, and Corporate lending will continue to drive loan growth and credit costs continue to come down boosting profits. Bank Central Asia remains a core holding. 

• In this insight, we summarized NWD’s FY2023 results.  We think the gearing and balance sheet, the biggest concern that market has, has been clearly addressed
• NWD has announced disposal of its stake in NWS, and will have more corporate actions to come.  The dividend expectation is reset
• We view most of the negatives are priced in at current valuation.  NWD is much better than a Chinese developer, and should not be trading at 0.19x PB

• ASX Ltd (ASX AU) is seeing weakness across key revenue items with best delta in what is non- core, net interest income. Suddenly, its operating cash flow is negative.
• New listings are down from 217 companies to 57 companies YoY to FY23 and their market capitalization is down from AUD59bn to AUD3bn YoY to FY23.
• SG&A costs seem to be rising structurally now at 28% of gross profit in FY23 compared with 23% in FY22 and compared with 17-19% in preceding years.

Since launch in 2011, the Diverse Income Trust (DIVI) has grown its dividend every year (compounding at an average annual rate of 6.5%), including during the global pandemic, when many UK dividends were cut. The strength of the trust’s revenue growth is also reflected in its capital appreciation that has enabled DIVI to deliver robust total returns. As globalisation has fractured over the last three years, equity income strategies have become increasingly popular with global investors, and the UK top 100 index (in US dollar terms) has outperformed other developed market indices. DIVI’s two co-managers, Gervais Williams and Martin Turner, are very optimistic because they believe that UK large-cap stocks will continue to outperform and historically UK small-caps have outpaced the performance of their larger peers. In this scenario, the prospects for the trust’s multi-cap approach look very favourable.